House Assistant Democratic Leader Jim Ward (left) of Wichita and House Democratic Leader Paul Davis of Lawrence confer prior to sending a letter to House Speaker Mike O'Neal. The letter said O'Neal should step down from a lawsuit against the state. O'Neal has denied any wrongdoing.

Topeka ? House Democratic leaders on Wednesday told House Speaker Mike O’Neal, R-Hutchinson, they will “take formal action” against him unless he steps aside from a lawsuit against the state.

O’Neal is lead attorney in a lawsuit representing businesses, trade groups and insurance funds. The suit alleges the Legislature violated the law last year by voting to take unused funds in various accounts set aside for specific regulatory purposes and diverting them to help balance the overall state budget.

O’Neal’s clients paid $5 million in fees into those accounts. The lawsuit seeks to force the state to repay those funds and not sweep those funds in the future.

Democrats say it is a conflict of interest for O’Neal to serve as the top official in the House and then sue the Legislature.

“It would be a disservice to the leadership position you hold, the legislative body you lead, and the constituents you represent to continue taking part in this suit,” the Democrats said in a letter to O’Neal’s office.

O’Neal was out of town, but he has denied any wrongdoing since the lawsuit came to light last month. O’Neal has said he is doing what many attorneys in the Legislature do; that is, representing clients involved in litigation that relates to state laws. He has called the attacks partisan.

O’Neal voted against the fund sweeps last year and entered a formal protest against the action. But Democrats said O’Neal’s formal protest raised suspicions “that you took this action only to satisfy a particular statute that would enable you to provide legal representation in the case.”

The letter was signed by House Democratic Leader Paul Davis of Lawrence, Assistant Leader Jim Ward of Wichita, Whip Eber Phelps of Hays, Caucus Chair Barbara Ballard of Lawrence, Agenda Chair Marti Crow of Leavenworth and Policy Chair Cindy Neighbor of Shawnee.

It was hand-delivered by Davis’ chief of staff, former Lawrence school board president Craig Grant, to Brent Haden, who is O’Neal’s chief of staff.